2022 has been a challenging year for the stock markets all across the world. In this blog, we cover the top gaining US Stocks in 2022 and the procedure for investing in US stocks for Indian residents.
The S&P 500 fell 9.3% in September as investors fled risky assets due to concerns about stubbornly high inflation, rash Federal Reserve interest rate increases, and an unclear global economic outlook. Currently down 24.7% year to date, the S&P 500 has defied the gloomy trend thanks to a few top-performing equities. Some oil and gas stocks that are profiting from rising energy prices and healthcare stocks with special positive triggers are among the top performers. The following list of companies with market capitalizations of at least $1 billion that trade on significant U.S. exchanges includes the ten best-performing equities of 2022 to date. The returns are total returns, which include the effect of any dividends, and they cover the period through September 30.
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Digital AMTD (HKD)
AMTD Digital is a Hong Kong-based online financial services company that completed its initial public offering in July. Shares of AMTD’s IPO were priced at $7.80. The stock shot up as high as $2,555.30 in early August and was soon the topic of social media memes. Even if AMTD only made $25 million in revenue in 2021, it briefly outperformed Coca-Cola Co. by reaching a mind-blowing peak market valuation of $310 billion before the trading frenzy subsided (KO). Even if AMTD shares have dropped to around $40, the stock has increased by 500% since its IPO price.
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Target Hotel Corporation (TH)
Target Hospitality is an unorthodox strategy for the oil and gas boom of 2022. The business offers workforce housing as well as additional temporary accommodation for mining, oil and gas drilling, large-scale events, government organisations, and disaster assistance. The stock has been moving up throughout the year, but most of its gains have come since the start of July. Following the announcement of a new government contract on July 8, TH increased its 2022 revenue guidance by 53%, causing the stock to increase by more than 31%. The share price of TH has increased by 154.9% since the new contract was announced on July 6 and will increase by 254.5% altogether in 2022.
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Scorpio Tankers (STNG)
The company Scorpio Tankers manages a fleet of ocean tankers that travel the world carrying refined petroleum products. Due to rising tanker rates following Russia’s invasion of Ukraine, Scorpio has reduced its debt by $511 million in the first half of 2022. Additionally, the company has improved its projected cash balance from $231 million to $591 million in 2022. In the second quarter, vessel revenue nearly tripled year over year to $405 million. Tanker rates will continue to be supported by soaring refined product demand, supply chain disruptions, and historically low stockpiles. Scorpio stock has increased 232.1% so far this year.
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Consol Energy (CEIX)
Coal is produced by Consol Energy in the Appalachian Basin. Consol has profited from rising energy prices, like other coal equities have, particularly since Russia invaded Ukraine. Consol reported a 105% increase in total coal revenue for the second quarter in August. Consol also started an improved shareholder return programme, generating $159.9 million in free cash flow, and paid off around $116 million in debt. In August, a special dividend of $1 per share was paid to begin the programme. Consol added that it planned to begin operations at its Itmann preparation plant by the end of the third quarter. Shares of Consol have been up 187.4% so far this year.
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PBF Energy (PBF)
Gasoline, diesel, and other refined petroleum products are produced by independent refiner PBF Energy. PBF has dramatically improved its balance sheet recently, decreasing its total debt by more than $2.6 billion over the last 18 months by taking advantage of the favourable energy climate. In 2022, diesel prices have surged by 35% while gasoline prices have risen by 13%. PBF announced a second-quarter sales gain of 104% in July. Investors might anticipate PBF to keep strengthening its financial position and perhaps even reinstate the dividend it stopped paying in March 2020. PBF Energy stock has increased 171% so far this year.
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PLC Torm (TRMD)
The refined oil shipping business Torm is situated in the UK and has a fleet of more than 80 fully owned ships. Time charter equivalent, or TCE, prices more than quadrupled in the second quarter, according to a report from Torm released in August. According to company management, the market has been even stronger so far in the third quarter. After Torm stated that rates had more than tripled from levels in 2021 in the current quarter, the stock increased by 10%. Torm has also sold seven of its oldest vessels since late 2021 by taking advantage of a seller’s market. In 2022, rising shipping costs have driven up shares of Torm by 162.8%.
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Omega Lithium Corporation (SGML)
Energy equities aren’t the only ones profiting from rising prices in 2022. A junior lithium mining firm is Sigma Lithium. The price of lithium carbonate has soared 190% in the past year to new all-time highs. Lithium is a crucial component in electric vehicles and other types of batteries. Sigma announced intentions to quadruple its short-term production of battery-grade sustainable lithium to 531,000 tonnes annually in August. The company also boosted the total mineral resource estimate in NI 43-101 by 50% to 86 megatons. Sigma shares have risen 161.2% so far this year as a result of rising lithium prices.
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Corp. Peabody Energy (BTU)
Peabody Energy is one of the biggest producers of pure-play coal in the world. After the situation in Ukraine caused coal prices to soar, Peabody reported an 80% increase in sales and a second-quarter operating cash flow of $283.1 million. Peabody also had its greatest quarterly total in more than ten years in terms of adjusted earnings before interest, taxes, depreciation, and amortisation, or EBITDA, at $578 million. Investors in Peabody justifiably anticipate the company’s strong growth rates to continue given recent trends in coal prices and the lack of any significant advancement toward a resolution in Ukraine. To date, BTU stock has increased by 146.5%.
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Rhythm Pharmaceuticals (RYTM)
A biopharmaceutical business called Rhythm Pharmaceuticals specialises in creating medicines to treat uncommon hereditary metabolic illnesses. Imcivree, the company’s primary medication, has received U.S. approval. For the treatment of Bardet-Biedl Syndrome, or BBS, see the Food and Drug Administration. Imcivree’s label was expanded by the FDA in June in order to assist BBS patients with weight management. In the first six weeks after the FDA label expansion, Rhythm reported receiving over 50 new Imcivree prescriptions. By the end of the year, Rhythm anticipates the European Commission to have finished its Imcivree evaluation. Shares of Rhythm Pharmaceuticals are up 145.5% so far this year.
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Lantheus Holdings
Diagnostic imaging technology is provided by Lantheus. When Lantheus released astronomical fourth-quarter earnings and revenue figures in February, its stock soared by 39%. It then rose by an additional 16% in April when it increased its 2022 earnings and revenue estimate. A major factor in Lantheus’ 121.4% revenue rise in the second quarter, according to the company, was the launch of its Pylarify PET imaging agent for prostate cancer. The Definity diagnostic ultrasonography boosting compound from Lantheus is also contributing to the company’s strong sales growth. The company’s positive sales momentum has sent the price of LNTH shares higher year to date by 143.4%.
How To Invest In US Stock
This section covers all the information a resident of India needs to know about making investments in foreign markets.
Two terms keep coming up when we discuss international investing – FEMA and LRS. All cross-border payments and transactions conducted by Resident Indians (RI) are covered under FEMA, which stands for the Foreign Exchange Management Act.
The RBI (Reserve Bank of India), India’s central bank, has introduced a programme called LRS under the purview of FEMA (Liberalised Remittance Scheme). Under this program, residents, including minors, may transfer up to $250,000 USD per person for approved current or capital account transactions per fiscal year. Though, any investment that exceeds the permitted limit needs RBI permission.
The maximum amount that a resident individual may move abroad for any allowed transactions is $ 2,50,000, or around Rs. 1.87 Cr. Transactions can be assigned to either a capital account or a current account, which includes costs.
If you spent $ 20,000 (Rs. 15 lakhs) on a foreign vacation during a given fiscal year (a current account transaction because it was an expense), you would now have $ 2,30,000 available for any future transactions. You could use this balance for either current account or capital account transactions. There are a few other things to keep in mind.
- First, there are no limitations on the number of transactions per year.
- Two, there is a single-use limit for each financial year, so even if you bring the remitted monies back to India, you cannot send any more money outside that year.
- In conclusion, RBI permits you to invest up to USD 2,50,000 in foreign markets through its LRS plan.
How Do I Invest In US Stocks?
Unless you want to invest indirectly through India-based ETFs and Mutual funds, you would need a brokerage account to invest in international markets, just like you would need one to buy equities in India.
In general, there are three major strategies to invest in foreign markets.
- Directly open a brokerage account with a broker situated in the US.
- Open an account with an Indian broker who has a partnership with a US-based backend broker, such as Kuvera.
- Finally, you can invest indirectly through Indian mutual funds or exchange-traded funds (ETFs) that track global indices like the NASDAQ 100 and the HANG SENG. like the Edelweiss Greater China Equity Offshore Fund or the Motilal Oswal Nasdaq 100. This is an indirect method because you may do it without a brokerage account and because there are no cross-border money transfers required, therefore the LRS limit does not apply.
Taxes
A tax on currency transactions was imposed in the Union Budget 2020. Under the RBI’s Liberalized Remittance Scheme, all remittances over 7 lakh would be subject to a 5% tax collected at source (TCS) (LRS). TCS will only apply to amounts that total more than Rs. 7 lakh in a fiscal year, not to the entire sum. For instance, if you send in 10 lakh, TCS will apply at a rate of 5% on the remaining 3 lakh, resulting in a tax of Rs. 15,000 due. When filing the annual IT returns, the taxpayer can request a refund and receive a TCS certificate.
Rather than being an additional expense for the investor, it is more of a cash management issue.
In case Indian residents hold US stocks for more than a period of 24 months he/she will be liable to pay long-term capital gains tax when he sells their shares. In case he holds shares for a period less than 24 months he will be liable for payment of short-term capital gains tax when he sells his shares.
The tax rate on capital gains on the sale of shares held for more than two years is 20% along with indexation benefits. Short-term holdings that are sold will have their capital gains taxed at the individual’s applicable slab rates. As an investor, you must provide Form A-2 to the approved dealer and Income Tax forms (Form 15CA and/or 15CB) as appropriate to each transaction when making the outward remittances. This is crucial to remember from a compliance aspect.
US Taxes, DTAA, and W-8 BEN
The US Internal Revenue Service, sometimes known as the Income Tax Department, is responsible for tracking and managing taxes in the country. India and the US have a tax agreement known as the DTAA (Double Tax Avoidance Agreement). Indians can avoid paying greater taxes in both nations because of the DTAA, yet they cannot escape paying taxes in the US. Your tax obligation in the US as a non-resident is different from that of a US resident. When you book any profits on your stock market holdings, you can avoid withholding taxes by identifying yourself as a foreigner using Form W-8 BEN.
Dividend
W-BEN also helps with dividends because, for instance, residents of India pay a flat 25% withholding tax on dividends received in the US. The W-8 BEN form verifies the person’s eligibility for this discounted rate.
Estate Duty
We Indians are not accustomed to this, but in the US, the heirs must pay estate tax on the deceased person’s inheritance, which may be as high as 55%. Investments in US assets may result in an estate tax. Therefore, when your stocks and other capital market investments are passed down as inheritance in the US, they are liable to estate tax. To avoid estate taxes, most people create joint accounts. This way, in the event, that one of the account holders passes away, the estate tax only applies to the asset’s value that the deceased account holder owned.
Conclusion
As of October 2022 investing in the US stock market is not a task for the faint-hearted. The US is going through a period of economic uncertainty and is officially in a period of recession. In this situation, it will be best for conservative investors to stick to investing in Indian stocks.
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